For merchants, as clients, this financial instrument makes good business sense on a practical, day-to-day operational level. It’s a quick, timely injection of capital allowing you to keep business ticking over and to expand.

But, once your business has signed up for a cash advance of this type, how is it treated for the record in accounting terms?

Here follows a typical example based on a cash advance lump sum of R100 000 as recognised in your ledger.

Note how this payback is based on an agreed percentage of your daily transactions or turnover (10% in this case), and is not a fixed monthly instalment.

Treatment of an MCA Deal in the Merchant’s Accounting Records

For further information, you and / or your accounting professional are welcome to contact us.